# MARKAL PRESENTATION P.R. Shukla. MARKet ALlocation Model  Multi-period linear programming formulation  Decision variables like,  Investment in technology.

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MARKAL PRESENTATION P.R. Shukla

MARKet ALlocation Model  Multi-period linear programming formulation  Decision variables like,  Investment in technology capacities & their utilization  Energy consumption  Emissions  Electricity generation in different time periods

MARKAL Overall Functioning Techno-economic Database Economic Scenario Emission Scenario MARKAL Consumption and production of energy Marginal ‘values’ of energy forms and emissions Introduction and abandonment of technologies

Bottom up View of the Energy-Economy-Environment System

Typical Reference Energy System

Model Formulation Objective Function To minimize the discounted sum, over 40 yrs, of investment, operating and maintenance cost of all technologies plus the cost of energy imports and carbon tax

Subject to 1.Demand Constraint (one for each end use demand) C ig (t) >= demand k (t) i  DMDG  GRD V k  DM, t  T Where DMD…end-use demand technology GRD…set of grades technologies/energy sources DM….class of all end use demands T…..set of time periods C ig (t)…capacity of technology i of grade G in period t Model Formulation (cntd.)

1.Capacity transfer constraints (to account for technology vintage carry over time periods) 2.Energy carrier balance constraints (supply >= demand of fuel) 3.Cumulative reserve constraints (fuel extraction <= total reserves) Model Formulation (cntd.)

4.Electricity balance constraints (day and night time modelling for electricity system) 5.Process technology capacity utilization constraints (process activity <= available capacity) 6.Electricity production capacity constraints (electricity generation <= available capacity) Model Formulation (cntd.)

7.Electricity peaking constraints (extra capacity to meet peak demand) 8.Total emissions constraints (Carbon, SO 2 etc) Model Formulation (cntd.)

Software Configuration of the Indian MARKAL

Modelling Non-linearities Grades for:  Technologies  Energy Resources

TECHNOLOGY DEPLOYMENT A Probabilistic Approach Pacific Northwest National Laboratory Battelle Memorial Institute ` Median Cost Technology 2 Market Price

TECHNOLOGY COMPETITION A Probabilistic Approach ` Median Cost Technology 1 Median Cost Technology 2 Median Cost Technology 3 Market Price

What are likely Future Energy Trends under Business-as-Usual (BAU) From 1995-2035  Energy Grows 3 times  Commercial Energy 4 times  Coal remains mainstay  High Oil/Gas Imports  Traditional Biomass Stagnates

From 1995-2035  Industry & Residential Grow 3.5 times  Commercial Grows 9 times  Agriculture Stagnates  Transport Grows 5 times Sectoral Energy consumption (EJ)

From 1995-2035  Industry share stagnates around 45%  Agriculture share declines from 28% to 10%  Commercial and Residential grow faster Sectoral Electricity consumption (TWh)

From 1995-2035  Coal share declines from 63% to 45%  Gas share increases from 8% to 23%  Hydro stagnates around 20% Electricity Generation Capacity (GW)

From 1995-2035  Coal share declines from 74% to 61%  Gas share increases from 7% to 19%  Hydro stagnates around 16% Electricity Generation (TWh)

Carbon Emissions (MT) 212 730

Sectoral Carbon Emissions (MT)

Carbon Emissions 1995 2010 2035

SO 2 Emissions ('000 Tons)

SO2 Kuznets Curve 2035 2020 2025

NO X Emissions (Million Tons)

GDP, Energy and Electricity

Marginal cost of electricity generation (Cents/kWh)

Mitigation Scenario Analysis

Marginal Cost of Carbon Mitigation (1995-2035) 6 billion tons of mitigation below \$25/ ton of carbon 0 10 20 30 40 50 60 1234567 Carbon abatement (billion ton) Cost (\$/Ton of Carbon)

Coal Demand 0 4 8 12 16 20 1995200520152025 2035 Exajoules Gas Demand 0 2 4 6 8 10 12 19952005201520252035 Exajoules Reference1 BT (5%)2 BT (10%) 3 BT (15%)4 BT (20%)5 BT (25%) Implications of Mitigation Targets Coal to Gas Switch

Electricity Price under Mitigation Scenarios Average LRMC 0 1 2 3 4 5 6 7 8 9 10 19952005201520252035 cents per kWh Reference1 BT (5%)2 BT (10%) 3 BT (15%)4 BT (20%)5 BT (25%)  Electricity Price Rises with Mitigation  In 2035, price can more than double

Reference1 BT (5%)2 BT (10%) 3 BT (15%)4 BT (20%)5 BT (25%) Electricity Price under Mitigation Scenarios Peak 0 3 6 9 12 15 19952005201520252035 cents per kWh Off-Peak 0 3 6 9 12 15 19952005201520252035 cents per kWh

Renewable Electricity Capacity 0 20 40 60 80 100 120 19952005201520252035 Giga Watt Share of Renewable 0 5 10 15 20 25 30 19952005201520252035 Percentage Reference5 % Mitigation 15 % Mitigation25 % Mitigation Implications of Mitigation Targets Renewable Electricity

Reference 5 % Mitigation 15 % Mitigation 25 % Mitigation Implications of Mitigation Targets Wind and Small Hydro Power 0 4 8 12 16 20 19952005201520252035 Capacity (GW) 0 2 4 6 8 10 19952005201520252035 Capacity (GW) WindSmall Hydro

Reference5 % Mitigation 15 % Mitigation25 % Mitigation Implications of Mitigation Targets Solar PV and Biomass Power 0 10 20 30 40 50 60 19952005201520252035 Capacity (GW) 0 2 4 6 8 10 12 14 16 18 19952005201520252035 Capacity (GW) Solar PV Biomass

Consumption Trends (Million Tons) High GrowthMedium GrowthLow Growth Oil ProductsCoal 0 300 600 900 1200 1500 1975198519952005201520252035 0 100 200 300 400 1975198519952005201520252035

Commercial Energy Demand and Intensity 0 200 400 600 800 1000 1200 1975198519952005201520252035 Mtoe 0 10 20 30 40 50 1975198519952005201520252035 toe / million Rs. High Growth Medium Growth Low Growth Low efficiency Commercial Energy IntensityCommercial Energy

0 5 10 15 20 25 30 35 40 45 50 19952005201520252035 Exajoules High Growth 5.5% Medium Growth 5% Low Growth 4.5% Commercial Energy Demand  Economic Growth Drives Energy Demand  Gradual Efficiency Improvement  Limited Fuel Substitution

Coal and Oil Demand Coal 0 200 400 600 800 1000 1200 1400 19952005201520252035 Million Tons Oil 0 50 100 150 200 250 300 350 19952005201520252035 Million Tons High Growth Medium Growth Low Growth

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 1975198519952005201520252035 toe/thousand \$ High GrowthMedium Growth Low GrowthLow efficiency Energy Intensity  Energy Intensity improvement rate 1.5%

0 200 400 600 800 1000 1200 19952005201520252035 Million Tons High GrowthMedium GrowthLow Growth Carbon Emissions From 1995-2035  Under BAU, Carbon Emissions rise 360%  Rise can be 470% for high growth case

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1975198519952005201520252035 tons of carbon/ thousand \$ High GrowthMedium Growth Low GrowthLow efficiency Carbon Intensity  Carbon Intensity Improvement rate 1.8 %

Coal Demand 0 4 8 12 16 20 1995200520152025 2035 Exajoule s Gas Demand 0 2 4 6 8 10 12 19952005201520252035 Exajoules Reference1 BT (5%)2 BT (10%) 3 BT (15%)4 BT (20%)5 BT (25%) Implications of Mitigation Targets Coal to Gas Switch

How Carbon Mitigation affects Production Cost? 2015 2035 0 50 100 150 200 250 Cost of Aluminum Production ALUMINUM 2015 2035 0 50 100 150 200 250 300 350 Cost of Steel Production STEEL 1 BT (5%)3 BT (15%)5 BT (25%)

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